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'Bold and creative' solutions needed for a sustainable, post-pandemic economy – UN News

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During the first in a series of roundtable discussions on responding and recovering better from the global crisis, this one with women economists, he painted a grim picture of acute suffering, saying that extreme poverty and hunger are set to increase drastically. Many healthcare systems are already at breaking point; and a whole generation of children is missing out on education. 

“The pandemic threatens not just to put the 2030 Agenda for Sustainable Development on hold, but to reverse progress that has already been made”, Secretary-General António Guterres said

Building back better

Against the backdrop of his call for an overall rescue package by governments, equivalent to at least ten per cent of the global economy, Mr. Guterres said he had met with the Prime Ministers of Jamaica and Canada, who lead the Group of Friends of Financing Sustainable Development, to identify ways to finance the recovery and build back better.

Some 50 heads of State and Government have stepped forward to lead a joint effort – with UN agencies, governments, financial institutions, private sector creditors and other – to address key challenges, ranging from global liquidity and debt vulnerability, to eroding illicit financial flows. 

He pointed out that developing countries face vastly increased demands for public spending “exactly at the same time” as tax and export revenues, inward investments and remittances, are plummeting. 

“As we craft a comprehensive global response, action on finance must be central”, underscored the UN chief. “If countries lack the financial means to fight the pandemic and invest in recovery, we face a health catastrophe and a painfully slow global recovery”. 

Debt crisis

The world is on the cusp of a widespread debt crisis, the top UN official said, noting that many countries face “an impossible choice” between servicing their debt or protecting their most vulnerable communities and fighting the pandemic.

Explaining that “debt defaults can have devastating social consequences”, he made clear that many countries lack financial market access to enable them to service their debt.

“Beyond the fiscal shock, the COVID-19 crisis has impacted all the components of external finance: direct investment, exports and remittances”, he continued, adding that as developed countries themselves deal with the crisis, official development assistance is also under pressure.  

For recovery and to realize the SDGs, “durable solutions on debt” must be considered “to create fiscal space for investments”, stressed Mr. Guterres.

“Uncertainty and a further retreat to inward-looking policies and protectionism could turn today’s sharp decline into a prolonged period of weak external financing”, the UN chief cautioned.

Moreover, as the pandemic disrupts supply chains and trade, he flagged the danger that some manufacturing will move back to developed countries, further reducing developing countries’ resources, and challenging their integration into the global economy.

“These questions need bold and creative answers” Mr. Guterres upheld. 

Finding solutions

According to the UN chief, “we need the insights and perspectives of all”, including “prominent and innovative” women economists, to create “inclusive, resilient and gender-equal societies” to address the climate crisis and other global challenges. 

“We need concrete, radical and implementable solutions”, spelled out the Secretary-General, voicing hope that the series of roundtables will stimulate new ideas and “a totally different debate in relation to the classic ones we have witnessed in the recent past”. 

Much-need transformation

In imagining “a new global economy in which finance becomes a means and not an end”, Deputy Secretary-General Amina Mohammed noted that external finance “needs to change course”. 

“We need a partnership with financial markets to change the balance and achieve the SDGs”, she said, adding that investments cannot be only about profit at any cost but must “land on the right side of history”.

The transformation must “break the inequality and environmental degradation enchantment that darken our future”, she continued, pushing for a new global economy “based on sustainable consumption and production, on sustainable infrastructure that gives access to all to the opportunities of the future”.

“And we need to do it for the next generations”, concluded the deputy UN chief. “Rebirthing the global economy is an opportunity to empower them to confront the current and looming challenges”.

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Economy

Oil prices climb on hopes for economic recovery

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Oil prices edged higher on Monday as European economic reopenings and rising U.S. demand helped offset weakness earlier in the session due to surging coronavirus cases in Asia and underwhelming Chinese manufacturing data.

Brent crude rose 56 cents, or 0.8%, to $69.27 a barrel by 11:22 a.m. ET (1522 GMT,) and West Texas Intermediate (WTI) crude was up 63 cents, or 1%, at $66.

The British economy reopened on Monday, giving 65 million people a measure of freedom after a four-month COVID-19 lockdown.

With accelerating vaccination rates, France and Spain have relaxed COVID-related restrictions, and Portugal and the Netherlands on Saturday eased travel restrictions as the holiday season approaches.

The promise of economic growth has supported oil prices in recent weeks, although the pace of inflation has kept many investors concerned about the possible rise of interest rates and fall of consumer spending.

“The news is not all negative on the demand front as the U.S. saw air travel jump on Sunday to 1.8 million people, the highest total since March 2020,” said Edward Moya, senior market analyst at OANDA.

United Airlines also announced they will add 400 daily flights to July for European destinations, Moya noted.

Summer travel bookings rose 214% from 2020 levels, the airline said, adding that it planned to fly 80% of its U.S. schedule compared with July 2019.

Worries about the spread of the coronavirus variant first detected in India are also making investors cautious.

Some Indian states said on Sunday they would extend lockdowns to help contain the pandemic, which has killed more than 270,000 people in the country.

Domestic sales of gasoline and diesel by Indian state refiners plunged by a fifth in the first half of May from a month earlier.

Singapore is preparing to close schools this week and Japan has declared a state of emergency in three more prefectures to contain outbreaks.

“The market is seemingly trapped between observing encouraging improvements in demand in the United States and Europe, and the sluggishness in consumption due to the persistence of COVID-19 in Asia,” StoneX analyst Kevin Solomon said.

China’s factories slowed their output growth in April and retail sales significantly missed expectations as officials warned of new problems affecting the recovery in the world’s second-largest economy.

China’s crude oil throughput rose 7.5% in April from the same month a year ago, but remained off the peak seen in the last quarter of 2020.

U.S. retail gasoline prices hit a fresh seven-year high on Monday, as it will take some time for the nation’s largest fuel pipeline’s supply chain to fully catch up after a cyberattack that resulted in a six-day system outage last week and mass panic-buying.

(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Yuka Obayashi in Tokyo; Editing by Marguerita Choy and Barbara Lewis)

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Economy

World Economic Forum cancels 2021 annual meeting in Singapore

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The World Economic Forum cancelled its 2021 annual meeting scheduled for Singapore in three months’ time on Monday, saying it was not possible to hold such a large, global event due to the COVID-19 situation.

“Regretfully, the tragic circumstances unfolding across geographies, an uncertain travel outlook, differing speeds of vaccination rollout and the uncertainty around new variants combine to make it impossible to realise a global meeting with business, government and civil society leaders from all over the world at the scale which was planned,” it said in a statement.

WEF had already pushed back its special meeting in Singapore, initially scheduled for mid-May, following the announcement last year it was moving from its usual home in the Swiss alps due to the pandemic situation in Europe.

The city-state has in recent days imposed some of the tightest restrictions since it exited a lockdown last year to combat a spike in local COVID-19 infections.

Acknowledging WEF’s decision to cancel the event, the Singapore trade ministry said on Monday that it “fully appreciates the challenges caused by the ongoing global pandemic, particularly for a large meeting with a broad span of international participants.”

The WEF’s next annual meeting will instead take place in the first half of 2022. Its location and date will be determined based on an assessment of the situation later this summer, it added in a statement.

(Reporting by Michael Shields; Editing by Toby Chopra and Catherine Evans)

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Economy

Wall Street weighed down by inflation jitters

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Wall Street’s main indexes slipped on Monday after a sharp recovery late last week, as signs of inflationary pressures building up in the economy kept investors worried about monetary policy tightening.

Shares of Discovery Inc jumped 7% on plans to merge with U.S. telecoms giant AT&T Inc’s media assets, including CNN and HBO. AT&T shares gained 3.8%.

The S&P 500 saw its biggest one-day jump in more than a month on Friday as investors picked up beaten-down stocks following a pullback earlier in the week on concerns around inflation and a sooner-than-expected tightening by the U.S. Federal Reserve.

In a relatively quiet week for economic data, minutes on Wednesday from the Fed’s policy meeting last month could shed more light on the policymakers’ outlook of an economic rebound.

“The conversation around inflation is really the focus of the market and everyone’s trying to get a picture on whether the Fed is right in saying if this is all temporary or is this something they need to take more seriously,” said Greg Swenson, founding partner of Brigg Macadam.

“You’ll continue to see rotation (out of technology stocks) not only because of the outperformance of tech in the last year versus cyclicals, but the only way you can stay long equities and hedge against inflation is own more cyclicals – bank, energy.”

The Russell 1000 value index, which includes energy and bank stocks, continued to outperform on Monday, taking its year-to-date gains to 17.3%, versus its tech-laden growth counterpart’s rise of about 4%.

At 9:44 a.m. ET, the Dow Jones Industrial Average was down 68.67 points, or 0.20%, at 34,313.46, the S&P 500 was down 9.19 points, or 0.22%, at 4,164.66, and the Nasdaq Composite was down 48.45 points, or 0.36%, at 13,381.52.

Four of the 11 major S&P sectors declined, with technology leading losses.

Earnings this week will be scrutinized for clues on whether rising prices had any impact on consumer demand and if retailers could sustain their strong earnings momentum.

Walmart Inc, home improvement chain Home Depot Inc and department store operator Macy’s are set to report on Tuesday, with Target Corp Ralph Lauren and TJX Cos on tap later in the week.

With the earnings season at its tail-end, overall earnings for S&P 500 companies are expected to have climbed 50.6% from a year ago, according to Refinitiv IBES, the strongest pace of growth in 11 years.

ViacomCBS shares gained 3.5% after a report that billionaire George Soros’s investment firm bought stocks as they were being sold off during the meltdown of Archegos Capital Management.

Cryptocurrency-related stocks like Marathon Digital, Riot Blockchain and Coinbase fell between 6% and 9% as bitcoin swung in volatile trading after Tesla boss Elon Musk’s tweets about the carmaker’s bitcoin holdings.

Declining issues outnumbered advancers for a 1.27-to-1 ratio on the NYSE and for a 1.27-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and no new low, while the Nasdaq recorded 44 new highs and 19 new lows.

 

(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel)

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